Hercules has lost a $1.8 million wetlands restoration grant in the wake of a scathing audit by the state controller of the city's handling of state and federal funds.
The grant, totaling $1,836,680, was to go toward restoring the 12-acre Chelsea Wetlands near San Pablo Bay and the Pinole city line.
"In light of the recent audit by the state, we are exercising our option to terminate the grant," Clark Blanchard, spokesman for the California Natural Resources Agency, said Thursday. None of the grant money has been spent, he added.
Program Manager Polly Escovedo, in a letter Tuesday announcing the grant termination, said the controller's audit report raised "serious concerns ... regarding the city's lack of fiscal accountability."
The audit, published May 10, reviews Hercules' expenditures of state and federal funds in the 2009-2010 fiscal year.
Meanwhile, in what is shaping up as a war of letters and words, Controller John Chiang fired back at Hercules on Thursday, defending the tone of his audit and a news release May 10 that accused the city of dragging its feet in responding to the state's request for records. In reaction, Mayor Dan Romero and City Manager Steve Duran last week had accused Chiang of grandstanding.
Taking issue with Chiang's complaint that Hercules produced only 15 of 107 documents requested, they had countered that the city produced 52 boxes with more than 10,000 pages of documents. In a written
Chiang, in a letter Thursday, thanked Romero for his commitment to produce the records, even as Chiang complained how long the record-gathering already has taken. State audits of Bell and Montebello, which are similarly embroiled in financial crisis and requests for documents from numerous agencies, took from four to six months, Chiang said, while the audit of Hercules is running into its 10th month.
Still pending are reports on the now-defunct Hercules Redevelopment Agency and the city's financial internal controls.
Chiang also noted that Hercules "flooded" his staff with 52 boxes of documents instead of producing specific ledger statements, canceled checks, bank account records, cash reconciliation documents and other pertinent records.
"Quantity is a poor substitute for the quality of documentation required for a thorough examination of Hercules' use of state and federal funds," Chiang wrote.
Later on Thursday, Romero said, "It was good to receive the letter from the state controller."
"The city of Hercules is not trying to wage battle against the state controller but to solve the problems," Romero said. "But we also hope the state controller will be mindful what occurs with his terse tone and the problems that may arise as a result, with future grants and pending grants."
Romero said he is disappointed that the city lost the Chelsea grant. Blanchard said the city can reapply in the future.
Hercules is counting on millions of dollars in state funds to build an intermodal transit center for buses, trains and ferries on the waterfront.
Contact Tom Lochner at 510-262-2760.
Read state Controller John Chiang's letter to Hercules Mayor Dan Romero at ContraCostaTimes.com.